Sale of goods for PLN 1 as part of a promotional campaign and PIT

Service-Tax

In business transactions, entrepreneurs, in order to increase their turnover, organize promotional sales, under which the buyers of their goods or services have the right to receive a free prize or purchase it for a symbolic zloty. So what does the sale of goods for PLN 1 look like in the light of the law? The purpose of this article is to present the tax consequences of personal income tax for persons purchasing such awards, as well as to determine whether the entity selling the awards for a small fee is a tax payer obliged to collect and pay it to the account of the tax office.

Sources of income

The basic principle in the provisions of the Personal Income Tax Act is the principle of universality of taxation, expressed in art. 9 sec. 1 of the Act of July 26, 1991 on Personal Income Tax (Journal of Laws of 2016, item 2032, as amended, hereinafter referred to as the "Act of July 26, 1991"). Pursuant to this provision, all types of income are subject to income tax, except for those listed in Art. 21, 52, 52a and 52c and the income from which the tax collection was abandoned pursuant to the provisions of the Tax Code.

In art. 10 sec. 1 of the Act of July 26, 1991, various sources of revenue were listed, including employment relationship, non-agricultural economic activity and other sources.

It should be noted that, as defined in Art. 10 of the Act of July 26, 1991, the catalog of sources of income is a separate catalog, which means that one specific income may be qualified only for one source of income. Therefore, in such cases, one should look for the dominant features for a given source of income. At the same time, one should follow the principle that each identification of a given income should be associated with an attempt to assign it to one of generically named sources of income (Article 10 (1) points 1-8a), and only in the event of failure to achieve this goal of assigning it to income. from other sources (paragraph 9).

Pursuant to Art. 14 sec. 2 point 8 of the Act of July 26, 1991, income from business activity is also the value of received benefits in kind and other gratuitous benefits, calculated in accordance with Art. 11 sec. 2-2b, subject to article 22. 21 sec. 1 point 125.

Pursuant to Art. 20 paragraph 1 of the Act of July 26, 1991, for revenues from other sources referred to in Art. 10 sec. 1, point 9, it is considered, inter alia, prizes and other free benefits that do not belong to the revenues specified in art. 12-14 and art. 17. Therefore, according to Art. 20 paragraph 1 of the Act, the award is income from another source, if it cannot be attributed to the sources specified in Art. 12-14 of the Act, i.e. for non-agricultural business activities. Therefore, if a given contribution is unequivocally income from the taxpayer's business activity (as it is a direct result of conducting such activity), it is subject to taxation in accordance with the rules applicable to the business activity in question; such a contribution may not also constitute income from other sources.

10% flat tax

Pursuant to Art. 30 sec. 1 point 2 of the Act of July 26, 1991, on the income (revenue) from winnings in contests, games and mutual wagering or prizes related to bonus sales, obtained in a Member State of the European Union or another country belonging to the European Economic Area flat-rate income tax of 10% of winnings or prizes.

The concept of bonus sales has not been defined neither in the Act of 26 July 1991 nor in other regulations. The term "bonus" ("bonus") is also not defined in the legislation. According to the dictionary of the Polish language, a bonus is a reward for something, additional remuneration for doing something. The concept is therefore used to describe the benefit received by someone who has acted in the manner prescribed by the awardee. The adjective "bonus" should therefore be understood as referring to the above-defined bonus. A bonus sale is therefore a sale as a result of which the buyer of a good or service received an additional benefit related to the fact that he behaved in the manner indicated by the seller, for which the seller awards a bonus.

In the legal status in force in 1999 (which was in force until the end of 2000), the resolution of the Supreme Administrative Court of 25 June 2007 was passed, ref. No. II FPS 5/06, from which it follows that the bonus sale referred to in Art. 30 sec. 1 point 2 of the Act of 26 July 1991 is consumer, individual, incidental sale, not related to the business activity conducted by the taxpayer. Due to the fact that the resolution was issued under the previous legal status, in terms of the current legal status, it will not be binding under Art. 269 ​​of the Act of August 30, 2002, Law on proceedings before administrative courts (i.e. Journal of Laws of 2016, item 718, as amended).

In some of the later judgments, the courts presented a different view that bonus sales to natural persons conducting business activity are subject to taxation pursuant to Art. 30 sec. 1 point 2 of the Act of July 26, 1991, as it is a special provision (see the judgment of the Provincial Administrative Court in Warsaw of July 21, 2010, file No. III SA / Wa 169/10, of August 8, 2012, file ref. No. III SA / Wa 2988/11, of April 17, 2013, III SA / Wa 3381/12 and the Provincial Administrative Court in Wrocław in the judgment of January 16, 2013, file no. I SA / Wr 1417/12). However, in some of these judgments, the court indicated that the receipt of the award was dependent on other circumstances, not only obtaining a certain value of purchases, for example obtaining a high value of purchases compared to the amount of purchases made by other customers. For example, in the judgment of the Supreme Administrative Court of 20 January 2015, ref. No. II FSK 232/13 states that: It follows that the sales volume of the Complainant's products, resulting from the economic activity conducted by a given entrepreneur, did not in itself guarantee a win in the competition. It was necessary to compare it to the sales volume of other participants, which was beyond the influence of a given entrepreneur. It should be noted here that the rebate system is another thing, in which all contractors of a given entrepreneur receive benefits after reaching a certain turnover threshold and meeting other conditions specified by him.

Individual interpretations of tax law

On the other hand, the Minister of Finance, in most individual interpretations of tax law, expresses the position that the entity organizing the bonus sale and selling the bonuses for PLN 1 is not a payer, e.g. interpretations of the Director of the Tax Chamber in Warsaw of February 15, 2013 No.IPPB1 / 415- 1521 / 12-2 / MS and on August 20, 2015 No.IPPB1 / 4511-655 / 15-2 / EC, interpretation of the Director of the Tax Chamber in Katowice of July 3, 2014 No. IBPBII / 1 / 415-243 / 14 / MK , interpretations of the Director of the Tax Chamber in Poznań of September 2, 2010 no. ILPB4 / 423-10 / 10-4 / MC and no. ILPB1 / 415-680 / 10-2 / AO and of April 8, 2009 no. ILPB3 / 423- 83 / 09-3 / JG.

On the other hand, in some of the interpretation, the authorized bodies present the view that the value of awards received as part of bonus sales, as income from free or partially free benefits, is subject to taxation with other income obtained from business activity, e.g. interpretation of the Director of the Tax Chamber in Katowice from 2 February 2017 No. 2461-IBPB-1-1.4511.652.2016.1.BS, interpretations of the Director of the Tax Chamber in Bydgoszcz of June 13, 2016 ITPB1 / 4511-352 / 16 / DP and on September 5, 2014, ITPB2 / 415 -579 / 14 / MM, interpretations of the Director of the Tax Chamber in Warsaw of August 20, 2015 No.IPPB1 / 4511-655 / 15-2 / EC and September 26, 2014 No. IPPB1 / 415-853 / 14-2 / ​​EC, in the amended interpretation by the Minister of Finance of January 11, 2016, ref. no. DD9.8220.2.129.2015.JQP. It should be noted that in the case of most of these interpretations, the entity submitting the request for their issuance expressed such a view in its own position, and the authority issuing the interpretations considered it to be correct.

Also in some of the interpretations issued, the authorized bodies took the position that in these cases there would be no income on the part of the award buyer, e.g. interpretation of the Director of the Tax Chamber in Warsaw of February 15, 2013 no. IPPB1 / 415-1521 / 12-2 / MS, interpretations of the Director of the Tax Chamber in Katowice of July 3, 2014 No. IBPBII / 1 / 415-243 / 14 / MK and December 11, 2013, ref. no. IBPBII / 1 / 415-873 / 13 / MK, interpretations of the Director of the Tax Chamber in Poznań of September 2, 2010 no. ILPB1 / 415-680 / 10-2 / AO and of April 8, 2009 no. ILPB3 / 423-83 / 09 -3 / JG.

What is a free benefit?

In addition, attention should be paid to the definition of the concept of "gratuitous benefit" in the jurisprudence, e.g. the Supreme Administrative Court in the judgment of 16 June 2011, ref. No. II FSK 788/10 stated that: Despite the lack of a statutory definition of normative return, it can be assumed that, in terms of taxation, it covers all services, including those relating to the exercise of someone else's rights (as in the judgment of the Supreme Court of 6.08.1999 III RN 31/99). On the other hand, the main feature of the free benefit is that the beneficiary is not obliged to provide any consideration, e.g. price reduction due to the sale of a good or a provided service. The concept of gratuitous benefits includes those which result in gaining benefits at the expense of another entity, or which result in a gratuitous, i.e. non-cost or other form of equivalent, gain of property for that person, having a specific property or financial dimension. The key feature of a gratuitous service is therefore that the recipient of such a benefit is not obliged to provide any consideration. Therefore, in order for a given benefit to be considered free of charge, it is necessary for it to consist solely in a unilateral gain on the part of the entity that obtained the benefit. Therefore, free of charge benefits will be, in particular, any services performed for the benefit of the entitled person, e.g. granting him the right to use or use an asset. It is also possible to speak of a free benefit in the event of abolishing a specific activity of the taxpayer, e.g. making real estate available for business free of charge. Therefore, the owner of the encumbered real estate does not obtain any benefits, which could be, for example, a discount in charges for the supply and use of electricity.

Sale of goods for PLN 1 - summary

Therefore, if obtaining the right to buy a prize for PLN 1 is related only to the activity of the program participant as part of his business and will not be required to take additional activity apart from minor activities, such as registering in the program and selecting the prize, the awards will be a direct consequence of conducting business activity. As a consequence, the entity organizing the promotion will not be a personal income tax payer pursuant to Art. 30 sec. 1 point 2 of the Act of July 26, 1991 in connection with the sale of prizes for PLN 1.

On the other hand, with regard to the emergence of income from partially free benefits, it should be noted that the sale of goods for PLN 1 after the buyer reaches a sufficiently high level of purchases, does not mean that the goods are released without payment or only for partial payment. The price for other goods, the purchase of which in the appropriate quantity, in accordance with the promotion regulations, determines the possibility of purchasing a specific product at the promotional price, as it may include the price of the goods sold for PLN 1. For the seller, the sale of goods for a token sum is justified from an economic point of view, as customers will ultimately purchase more goods or some specific goods, thus increasing the sales turnover. It should therefore be emphasized that this is an economically justified company strategy, and not a partially free service used in relations with a given entity.

Summing up, in the light of these arguments, the acquisition of the award by a program participant for PLN 1 will not generate tax income on account of the conducted business activity (receiving a partially free benefit) or income from other sources. However, this position, due to the divergent views expressed in the interpretations, may be questioned by the authorities.

Radoslaw Pazik